A deal to save Bayonne Medical Center fell apart last week, when Fortis Property Group announced it was not a partner in the deal, despite claims in court to the contrary.
However, the hospital will likely be getting a second bidder in the near future.
City officials thought a buyer had been found for the ailing hospital when – just hours prior to a bankruptcy court hearing – they discovered the money was not available, and Fortis discounted any connection to Urban Suburban Associates. Representatives from Urban Suburban Association were supposed to provide a $2.5 million deposit on the $32 million sale by Nov. 3, but never did.
When Interim Mayor Terrence Malloy called Fortis Property Group on Nov. 5 to find out about the money, Fortis said it was not involved in the transaction.
“At no time has Fortis entered into an agreement either directly or through an affiliate to acquire the BMC, finance the acquisition of the BMC, or to invest in the BMC,” said a release from Fortis on Nov. 6. “Urban Suburban Associates is not an affiliate of Fortis.”
Councilman Gary LaPelusa said this news could spell the end of the Bayonne Medical Center as an acute care facility, although he continued to express hopes that another deal can be cobbled together that will satisfy the court.
The Bayonne City Council held an emergency meeting on Nov. 5, voting to continue its support and to reiterate its commitment of providing $6 million to cover operating expenses for the hospital until a sale can be completed.
The news, however, does not look promising, since U.S. Bankruptcy Court Judge Morris Stern has order BMC to send all employees a federal Worker Adjustment and Retraining Notification, which gives the employees a 60-day warning that the hospital could close.
Second bidder
“The hospital did issue the federally required Worker Adjustment and Retraining Act (WARN) notification,” said Mary Jane Desmond, spokesperson for Save Bayonne Hospital Collation. “But we hope that the current problems can be fixed. If not, we are hoping that the second bidder will resubmit its offer of last week.”
Stern has agreed to allow the second bidder on the hospital to proceed with a scheduled hearing to be held on Nov. 27 to see if IJKG – a healthcare company that has offered $18.8 million for the hospital – can meet some conditions, such as agreeing to pay off most of the hospital’s $18.8 million debt and provide the $8.5 million needed for operating expenses until the closing can be completed. With the city providing $6 million, the rest is expected to come via a $2.5 million loan from the state Health Care Facilities Financing Authority.
Stern noted that BMC continues to lose $600,000 a week, but officials from IJKG said they are looking into immediate cost savings.
“I accurately predicted that Urban Suburban would be a huge mistake,” Desmond said. “They thought that cold cash would fix things, [instead of] a group promising long-term commitment [15 years] to keep BMC as an acute care facility, a solid business plan, and owners with actual healthcare/hospital expertise.”
Desmond said Judge Morris has been extremely patient, and hopes he will continue to support the concept of a sale.
She said she believes IJKG, led by Jim Lawlor, is the best option.
“Back at the end of 2006 and in the beginning of 2007, I had asked Jim Lawlor and [then Mayor Joseph] Doria how we could get Jim to be the CEO of BMC,” Desmond said.
At the time, Lawlor apparently wasn’t interested in the CEO spot, even though Desmond and other public officials believed Lawlor had the right approach.
“What is disturbing is that the Judge ordered the WARN letters to be issued. Once that is out there – panic sets in,” Desmond said. “Hopefully we will not lose additional staff out of fear of the loss of their job. But, it would be foolish to think that people would just sit tight and keep their fingers crossed.”
Desmond continued to be critical of the hospital board of directors, whose “bad judgment” caused the crisis. Other city officials noted that the crisis could have been lessened had the board acted earlier to stop the bleeding, in particular four or five years ago, when they allowed then-President Richard Evans to use the hospital’s endowment to cover operating expenses.
If sale with IJKG is rejected, Desmond said the city may have to revisit the concept of purchasing the hospital, rather than see it close.
“This last resort option may have to be revisited despite the resistance,” she said. “Unlike the airlines, this is not an entity with publicly traded stock, employees cannot buy stock and take ownership of the facility. There is no way for them to assume the creditors’ debt. Even if Doctors tried to buy this, the debt is a huge obstacle to overcome.”
LaPelusa, however, said he does not believe taxpayers can afford to purchase the hospital.
“I’m hoping that Jim Lawlor and his group can do this,” he said.